How to Use Loyalty Programs to Balance Your Budget

With the launch of the new PC Optimum program, we’re taking the opportunity to examine just how Canadians can make the most of loyalty cards and points programs. While there are advantages to in-store reward programs, if you’re not careful, they can actually cause you to overspend.

Our special guest host on today’s podcast, Sharon Hoyes, talks with our guest, Kimberly Hill, about how to use loyalty programs wisely to balance your budget.

There are several types of loyalty programs to choose from, including:

Points programs – like the new combined PC Optimum

Cash back loyalty programs – through credit cards or programs like Canadian Tire money

Fee-based programs – for example, a Costco Executive Membership

Partnered programs – such as the Scene card and coupon books

All these programs are designed to get you to shop more at their location. In order to make the most of loyalty programs, you need to be a prepared shopper. According to Kimberly:

Make sure you’re going with that list so you’re not just buying things just to get your points.

Loyalty programs are very sophisticated and it’s important to know that when you sign up you’re giving up part of your privacy.

This is all about big data and the more they learn about you the more targeted they get in their ad.

A good tip is to do the math before you buy. For example, you might get an offer of 200 points for every dollar of nectarines you buy. Then, you might also be offered a deal of 1800 points if you buy $9 worth of frozen burgers. Well, if we calculate it: 1800 points divided by $9 is 200 points per dollar. So, it’s essentially the same thing, but presented in a more exciting way.

Their goal is for you to spend more money, to buy more items. That’s the goal of the retailer.

The point is to evaluate before you make a purchase. To maximize the value of a points program, shop with a list, accumulate points, and then use them to get a discount on items you buy regularly.

FULL TRANSCRIPT – SHOW #180 How to Use Loyalty Programs to Balance Your Budget

Doug Hoyes: This is episode number 180 of Debt Free in 30. I’ve hosted every one of those shows over the past three and a half years but today for the first time ever I’m going to turn the microphone over to a guest host. Why? Because the money topic we’re going to discuss today is something I know very little about and that’s how to use loyalty programs on how to stretch your family budget. I have a points card in my wallet for the gas station I go to. I go to that gas station because it has the cheapest gas and it’s close to my house. I would go to that gas station whether or not I had the loyalty card. I got the card because the gas pump always asks for the card, so now I have one. I can use it, it’s simple, no thought required. But I do understand that if you know how these programs work, you can save yourself a lot of money.

True story, this week instead of standing in the cold and paying for gas at the pump, I walked into the shop and paid for my gas with my point’s card. I got a free fill-up. That’s pretty cool so obviously it’s possible to save money with no added cost and not much added effort.

So, what other programs are out there? Rather than be doing a lot of research to figure out what questions to ask a guest, I’m bringing in the experts. So today I turn the microphone over to our first ever guest host, my wife, Sharon Hoyes. Sharon, what are we talking about today?

Sharon Hoyes: Today we’re going to talk with someone whom I admire quite a lot. She has a lot of common sense when it comes to managing money on a tight budget. She’s a good close friend of mine. We’ve known one other for more than 10 years now and I recall vividly one of our first conversations about something, a decision that her and her family had made. They decided to sell a house they really loved and buy a smaller home. Why did they do that? Because they wanted to be able to manage their budget, be able to live within their budget and yet not at the same time over sacrifice in order to meet a monthly mortgage payment. That’s just how much common sense and how they approached managing their budget. So with that picture in mind I’m like to welcome today’s guest tell me who are you and tell me a little bit about yourself.

Kimberly H: My name is Kimberly Hill and I am a married mother of two boys, aged 9 and 16 and my husband and I do work very carefully on our budgeting and our planning to make sure that our family can continue to enjoy things and go places and experience activities in life that we can do without going into debt or using credit to do so.

Sharon Hoyes: And two boys, I get that, I have two boys myself and the food budget alone can kill us sometimes in the house. So that’s why you can see I suggested having Kimberly on the podcast to talk about how to stretch your income an still be able to enjoy extras. I know there’s a lot of loyalty programs out there, Kimberly why don’t we start perhaps talking about the different types of programs that are out there. What’s one that you really, really like? What type of program do you like the best?

Kimberly H: I think my favourite has been the PC Optimum, which is now your PC Plus. I’ve really enjoyed that. And we use that one quite regularly in order to offset some costs of our budget in order to purchase things at a better rate as well.

Sharon Hoyes: Yeah, so that’s the traditional point’s style program. In fact that’s one of the ones that you introduced me to a long time ago originally. And I agree with you getting points for free and then being able to exchange that on other items, that’s obviously a great deal. Some of the other programs that I like quite a lot I like to be in control of what I spend, I want to know. I what I want to spend my loyalty programs on something I need. So, I’m a big fan of things like a cash back program. So, I have a cash back credit card, something like the Canadian Tire program works for me. I don’t use it a lot but I have it because when I’m there they give me cash back that I can then turn around and use it in the store the way I need to.

I also like some fee based programs are okay. I have a Costco Executive Membership and I literally sat down and did the math. It costs $110 double, the normal price of $55 right now, to get a Costco Executive membership but I get 2% cash back once a year on everything I spend at Costco that I can then turn around and use as I need. As long as I spend doing the math at least $2,750 a year I’ve paid for that extra amount. And you can actually go to Costco, you can ask them to print a list of everything you’ve bought in the last year and you can do the calculation to decide is it worth upping to the fee based program at Costco or the more expensive executive membership, other types of programs that you like?

Kimberly H: We are very big users of coupons. We do use coupons. We have a coupon sorter which we simply just picked up at the dollar store and it sorts all our coupons, any gift cards that we might have and we make sure we go through that and see is there anything in here that will help us that we have on our shopping list? What can we use towards our shopping? And we also want to make sure you don’t forget about coupons so don’t forget that you have them.

Sharon Hoyes: That’s my problem.

Kimberly H: Yeah a lot of people do forget which is why the sorter helps. So that does help us a lot and you can separate it by the types of things that you buy. And so it’s really easy to pull them out and use them and make sure you’re using them because they can add up to quite a bit on a shopping list.

Sharon Hoyes: Yeah, I’m not that organized I have to be honest. My other problem with coupon books, because I’ve bought them in the past and like you say they just sit there, but my other problem with them is that they prompt you to buy things that you might not have otherwise bought. So you have to be really careful. They’re a great way to enjoy maybe a new restaurant or a new activity more cheaply but if you’re not careful then you’ll actually end up doing more things and spending more money than you were planning. So it’s just one of those things. You have to have good discipline I think both ways. One to make sure you use it and two to make sure you don’t use the ones you probably shouldn’t be using.

Kimberly H: Yeah, there is a lot of coupons in a book that are just feeder coupons, you really don’t need them. So it’s really sort out the ones you need, the ones you want and really if you don’t think you’ll use the others just get rid of them or find somebody else you that think might use them and give them away. But just don’t even keep them around because you will be tempted to use them.

Sharon Hoyes: Giving them away, that’s a really good idea. Okay so let’s wade into the new PC Optimum program that of course everyone’s been talking about. They just merged the old PC Plus and the Shoppers Optimum. I’ve been a big fan of the Shoppers Optimum program since you introduced me to it quite a few years ago. What do you think – I don’t really want to get into the details about how the new merge program works, it’s more what are some tips and tricks when you’re using that type of a points program? What do you use to make sure you get the best value out of it?

Kimberly H: Well, I think the most important thing is to go with a list. You need to have a list, you go through the flyer, you use what’s on special. You don’t just go there ad hoc and start throwing stuff in your cart without paying attention to is it on sale, is it a good deal, do I really need it? So, making a list and knowing your prices is very, very important especially if there’s different levels in order to achieve those points. Make sure you’re going with that list so you’re not just buying things just to get your points.

Sharon Hoyes: Yeah, I’m actually pretty anal about it. I actually go in, if you’re trying to meet a target, I actually go in and pull up the calculator on my phone because otherwise you do, you toss stuff in your cart and you’re not keeping track and you’re not following your list and the next thing you know the points program might’ve been at $75 and you’ve walked out and you’ve spent $89. Okay if you need the stuff but not okay if you’re really trying to maximize the value of the points program.

Kimberly H: Absolutely, yeah. The list and then adding them up as you go because sometimes you’ll get to the store and something on your list is not there or it’s out of stock, so you don’t want to just throw anything in your cart, you want to just continue to add it up as you go and make sure that you’re buying things that you need. If it’s on sale and consumable like your toilet paper maybe you buy two instead of one in order to get to that level because you know it’s on sale, it’s a good deal and I’m going to use it, it’s not going to go to waste.

Sharon Hoyes: Yeah, you mentioned about stuff that you need, I had to chuckle last night. So I just merged my two programs last night so of course they send me the offers. And they offered me 6,000 points for every $20 I spend on chips and pop. So I get it today’s Super Bowl Sunday but honestly we wouldn’t need $20 worth of chips and pop so I’m not going to out just because the point seem like a good deal. I’m not going to go out and I’m not going to fill up my cart with something that I don’t need.

Kimberly H: Yeah, absolutely. Because the companies are trying to get you to buy more things, that’s the whole point.

Sharon Hoyes: That’s the goal.

Kimberly H: That’s the goal. So, absolutely so you have to pay attention to that for sure.

Sharon Hoyes: So, the other thing I guess to do is you kind of need to do some basic math or understand a little bit of basic math in order to really make sure you really get added value out of these programs. So, under the new Optimum, PC Optimum, Program you get a $1,000 worth of points for every dollar you spend and with 10,000 points you can redeem. At Shoppers every dollar you get about 15 points for every dollar you spend.

Loblaws is a bit different they give you based on what – so they give you an item and they say I might give you 200 points if you buy mushrooms today. One of the things that – so you accumulate all these points, one of the things I always wondered is what’s your philosophy? Do you spend the points as they come in, do you keep them, do you let them accumulate, like what do you do?

Kimberly H: For Shoppers we actually allow them to accumulate. We do do that, we often use the points at holiday time to offset our holiday bills such as Christmas or Easter. We can go in and we can look for items that we can buy for your children or for ourselves for our home for the holidays and it helps because that’s a very expensive time of year, especially around Christmas.

Sharon Hoyes: Balancing the budget at Christmas time, really difficult, if you can use your accumulated points that might help.

Kimberly H: Yeah, very much. So we do buy gifts for our children as well as other family members too. And so it helps a lot because if you can spend a couple of hundred dollars of those points off, and that comes off your shopping at Christmas so that’s really, really important. And that’s generally what we do do, it’s a good idea for Christmas and holidays for sure.

Sharon Hoyes: Yeah, I used to let mine accumulate. Obviously the old Shoppers program the longer you let them sit there the more valuable. They kind of took that away and so I tend to go the opposite way. If there’s $10 and there’s no reason to let it sit there, the next time I shop I reduce my bill that month by 10 bucks. I think I worry sometimes when you leave stuff accumulating, you go into the store you say oh this is great I’ve got, you know, $50 worth of coupons or $50 worth of points I’m going to get something for free. And you’re not really getting it for free because there’s an opportunity cost. If you could lower your every day bill by $50 or by $10 or by $20 turning around and spending that maybe on something maybe you could have done without doesn’t really help you balance the budget. So, it’s a balancing act.

Kimberly H: Right, absolutely, yeah. And you really should look at it as yeah it’s not free money so you shouldn’t just go out and splurge on something you really don’t need. It’s points that you’re going to use towards things that you really do need. And it’s really important to help offset the cost of your family otherwise like you said it’s not going to reduce any costs at all.

Sharon Hoyes: No and to me that’s why we use these. They want you to spend money, you need to use it for a way to balance your budget. One of the other tricks that I do, and again it just comes down to the math, for some place like Shoppers I don’t shop there very often because I sort of keep making my list, I need this, I need this. There’s two or three, four things that I can only buy at Shoppers. They tend to be a little bit pricier. So I wait and once my list is big enough and they have one of their deal days then I go in and I try to hit that high tier.

So, you know, just to give you an idea when they offer you, you know, they say come in and spend $40 and we’re going to give you 15 times your coupons, 15 times your points. Well, when you do that then it’s going to be worth $162 if you spent that $42. But if you hit the $50 then all of a sudden they say no, I’m going to give you 50 times your points or 20. They give you more points every single – the higher you go. So if you can reach that $75 tier for example and they give you 20 times points, all of a sudden now your points you’re getting are worth $300 for every dollar you spent. That’s huge compared to the normal $15 but it’s also better than the lower level. So, I save up, I make my list, I wait till my list is really, really big and then I go in as you say with a calculator and hit that $75.

Kimberly H: That’s right and that’s what we already mentioned is that you want to make sure you’re not just trying to hit that high tier just throwing anything on your list. So if that item that you needed is not in stock yeah, absolutely you’re not going to reach that high level or you’re going to find something else that you really do need that is a good deal and just don’t throw anything in your cart.

Sharon Hoyes: No. You were talking to me earlier about doubling up on things so if you have Kleenex or toilet paper because they’re on sale and you’re, you know, five bucks short, throw in another one.

Kimberly H: That’s right. And they have limits at the store because they know they don’t want people going in and buying 50 bottles of Tide. So they do have limits but if you can reach that limit and be able to get to the next tier then it’s a huge savings in the end.

Sharon Hoyes: Yep. So okay we covered the whole Shoppers which was always my favourite part so of course now I’ll be using the new PC part, which I never did before. So, again it’s just being a little bit aware. You see they throw them at you with these points and it’s a little confusing. So if I go out and I buy a dollar’s worth of mushrooms I get 200 points. If I go and I buy a dollar worth of nectarines these are what they gave me last night, I get 200 points.

But then they also tossed in at me wow I get 1,800 points if I buy $9 worth of their PC frozen hamburgers. Well, 1,800 sounds great, I should do that I get 1,800 points. But really it’s the same. So, 1,800 points divided by the $9 you have to spend guess what? That’s back to 200 points per dollar to spend. So, they present them to you in a way that makes them look really, really enticing.

Kimberly H: Right. Because again, their goal is for you to spend more money, to buy more items, that’s the goal of the retailer.

Sharon Hoyes: Yep. The other thing that drives me crazy is they’ll send you – what they do is they learn about you, they learn what you buy. I will go in, I used to see this in Shoppers, so I will buy one of, you know, a higher end, higher priced item because I needed it and it was on sale and I got my points, I waited till the 20 times, everything worked out perfectly. Three weeks later they send me oh hey, if you buy that item again, say Tide, we’ll give you an extra 5,000 points.

Kimberly H: Right, but you don’t need it, you don’t need it. And that’s the thing so you don’t run in there and buy an item just because you’re getting extra points because it doesn’t make any sense in the long run.

Sharon Hoyes: Well and they are going to give you that slightly better points deal on that item because it’s not on sale this week too. So that’s the other thing, be aware, is it on sale, how often does it go on sale, can I get it somewhere else on sale?

Kimberly H: Right and know your prices. You really have to know your prices because they’re different everywhere. So what’s the best deal, what’s the best price I can get and if it’s not the best price then just carry on?

Sharon Hoyes: Yeah. Okay so that’s enough of PC Optimum, they’ve been getting enough news lately. Let’s look at other loyalty program tactics. Two of the things I’ve got to admit that drive me crazy are having 15 cards in my wallet, different loyalty programs everywhere and receiving a ton of emails every morning in my inbox. What are some of the things that you do to deal with that?

Kimberly H: It’s difficult but you can use a different email address if you wanted to just a free email and have all of your points programs to go that. You have to remember to go and check and see if there’s any deals. Some of them do require you to load them onto your card so even though you get the email you’re not necessarily getting the deal either. You have to actually load it onto your card. So that’s an important part too. Some of them you can use through an app as well. I know the Shoppers one was through an app so you could load it directly through your app and not get the emails.

Sharon Hoyes: Yeah I love that, I love their app, yeah.

Kimberly H: It’s so much simpler to use. So if there’s an app for something I will try to use an app and I think it just works better that way instead of having to go into your email all the time and it reminds you of when they have specials. And so you do want to take a look every once in awhile and you can also usually access their flyers and what’s on sale at the same time.

Sharon Hoyes: Yeah and I guess the other thing you can do is if you’ve got them on their app, unsubscribe from their email because every day they’re sending you buy this, do this, do this, do that.

Kimberly H: Yeah every single day they’re going to send something to you. So yeah just, yeah unsubscribe. If you have another way of tracking it then unsubscribe. If you never read the emails, you never pay attention to them you just wait till it’s the weekend or whatever and you’re going to look at your flyer and go shopping, just unsubscribe, don’t even bother with it. They are going to encourage you to continue to buy things to come in and buy things by sending those emails to you every day.

Sharon Hoyes: Yeah, you have to take control, you have to take control of the process. So your idea of using the app instead of the email means that you’re going to make the decision I’m going to – there’s a deal this week, there’s the 20 times points this week, now I’m going to go in, I’m going to see what deals are on, I’m going to match it with what’s on sale, what do I have in the house? You’re in control of the process.

Kimberly H: Right, regardless of what emails you get.

Sharon Hoyes: Yep. The other thing that I did recently is I downloaded something called the Stocard app, assuming I’m pronouncing it correctly. And I quite liked it because I hate standing in line and, I’m getting older so using the phone and flipping between all these apps, a bit confusing. So I now just open up my Stocard app and I’ve got my Canadian Tire, my PC Optimum card will be switched to that, my Chapters, my Air Miles, all the programs that I have I have on that one app.

So pulling up my bar code now is a lot easier now that I’m standing in line. So, I just pull it up click on the one I want and the bar code is there. Because I find with some of them they log you out of the app and so then you’ve got to log back in while you’re standing in line. It’s just too much pressure for me. So if you deal with a lot of them and you want to find your bar codes quickly, I would recommend the Stocard app, recognizing again one thing I can’t say more clearly, everything that you sign up for, every app, every program, every loyalty card, you’re basically giving up a little bit of your privacy.

Kimberly H: That’s right, yeah.

Sharon Hoyes: Yeah. You’re giving them your email; you’re granting them access to your purchasing history. Data is where all this, where all of the profits are coming from. This is all about big data and the more they learn about you the more targeted they get in their ad, the better those deals are going to seem when they send them to you because they make them look just this is just for you. It’s exactly what they say. So as long as you know that and you understand that then you can make better decisions when these deals are coming in and whatever. So it’s just something to always be aware of. Everything that you sign up for they now know about you.

Kimberly H: Right.

Sharon Hoyes: Okay Kimberly, I know you’ve mentioned many others to me in the past so I thought I’d just throw it to you, any other good programs that you use for everyday shopping out there.

Kimberly H: There’s another app that I really do like as well it’s called Check Out 51. And this one again you have to treat it the same as any other special or deal that’s out there because there are specific specials that are listed on here. But it’s something that you do after you’re done shopping. So once you’re done shopping you take your receipt you check out your 51 and you look and see what’s on there.

Sharon Hoyes: Receipts from anywhere?

Kimberly H: Receipts from anywhere.

Sharon Hoyes: That’s nice.

Kimberly H: Any store that you go to, they do have some that are specific to some retailers that if you buy it at this store then you can get the deal. But it’s literally a coupon but they’re giving it, building it up as a cash account for you. And so they might give you 50 cents if you buy a bag of Chips Ahoy. And then you scan your receipt, you click off whatever items are on that receipt and then I guess once they vet the receipt then they add the money to a cash account. Once you hit $25 you can say cash out and they mail you a cheque.

Sharon Hoyes: Nice.

Kimberly H: Yeah. So, I’ve done it several times and so far – it’s just something newer that we started using and it’s over $50. Twice I’ve cashed out and got the cheque and I’ve put it into my account and it’s cleared and everything’s been great. So I continue to use that one. And again you just want to sort of watch and see, you know, I can get a $1 if I buy this item but do you really need the item? So I tend to look at it after I’ve done shopping.

Sharon Hoyes: That’s a good idea, yeah.

Kimberly H: So, it doesn’t kind of encourage me to buy things I don’t need. It’s just hey if anything on my receipt happens to be on Check Out 51, then I upload my receipt and that’s it. It’s really quite simple.

Sharon Hoyes: Given the fact that I always lose my coupons and don’t track my coupons that might be a good one for me because it is after the fact, I don’t have to think about it when I go to the store.

Kimberly H: Yeah.

Sharon Hoyes: I like that.

Kimberly H: That’s right and I don’t look at it before I go to the store because I don’t want to be, you know, swayed towards a certain item or anything. And I won’t be swayed to go and shop at a specific store either so I don’t necessarily shop at those stores and say I’m going to go shop there just because Check Out 51’s going to give me $2. It’s not worth it in the end. So, I don’t do that.

Another one that is a good one is one called Flip and what this is it kind of combines all of the flyers for all of the different stores altogether. And if you’re a person that likes to go in and price match places like Wal-Mart or No Frills will price match other competitors and so you can actually use your app to pull up the flyer for the competitor and show it to them and then they will price match it for you. And it also allows you to quickly look around and see where a specific item is on sale without having to flip through all of the flyers. You’re technically flipping through the flyers on your phone instead.

Sharon Hoyes: That’s actually really good too. If you’re in a store and you have the deal, quote the points, if you buy this you get 2,000 points, you can say okay, but how does price compared to – I can get it. So you can make that conscious decision nope, I’d rather go buy it someplace on sale than buy for points.

Kimberly H: That’s right, yeah. And there’s different ones, different sizes of packaging too you need to watch for. Some people think oh it’s a good deal but it’s the smaller package. I can get a larger package elsewhere for about the same price. So, you’re not getting the same item per se. So you have to really watch your prices and number of items in the packages as well.

Sharon Hoyes: Yeah, that’s good. So, I mean as you can see we’ve been talking to Kimberly for awhile on just how to use different loyalty programs to balance your budget. Living frugally isn’t really about sacrificing and doing without, I can’t have this and I can’t have that. It’s about making the most of your money. Taking advantage of loyalty programs definitely does that and it can help you out as long as you only buy exactly what you need.

The best programs for managing your money are the ones that are going to give you things where you’re going to buy anyway or you’re buying things day to day on things you have. I like cash back programs because it puts me in control and lets me decide where I’m going to spend the cash I get back. Points programs are good as long as you think about it when you redeem those points. Again, do you need what you redeemed it on to use it to lower your budget? That’s our show for today. Kimberly thanks for joining me and being here.

Kimberly H: Well, thank you very much for having me. It’s been a fun day.

Sharon Hoyes: Next week Doug will be back with Ted Michalos with a short show on a cool math trick – the rule of 72. So, please tune in for that. As always full show notes, including full links to everything we discussed and a full transcript for today’s show can be found at hoyes.com. That’s H o y e s dot com. Thanks for listening, until next week, that was Debt Free in 30.